Dynex Power Inc. announced that its revenue in the third quarter was 9% ahead of that reported in the second quarter and the revenue for the year to date is 10% ahead of the same period last year. Despite sharp increases in energy and material costs, careful control of costs, efficiency improvements and the elimination of lower margin products have meant that the loss for the year to date is significantly lower than the first nine months of last year. Further revenue growth is expected in the fourth quarter. Management is forecasting a small profit for the fourth quarter, but continued rises in UK energy prices and hence in other input prices will impact negatively on the absolute level of that profit. As a consequence, even though revenue and overheads are on plan, the profit forecast for the fourth quarter is unlikely to be sufficient to enable the company to record the overall profit for the year that had hoped for.
Significant orders have recently been reported for supplying products for both Royal Navy Type 45 destroyers and to a high voltage direct current station in the Gulf totalling $3.9 million and the receipt of a research and development grant of $1.1 million. These events were complemented by the completion of a new $5.2 million secured working capital facility with Landsbanki.
Dr Paul Taylor, President and Chief Executive Officer commented that "our third quarter performance confirmed that our recovery continues and that the strategic direction we are pursuing is being welcomed by the market. Whilst high energy costs and rising material prices present the business with problems to overcome, the strength of our order book and continuing management focus on tight control of all our costs means that we can look forward to a return to profitability in the fourth quarter."
Bob Lockwood, Chief Financial Officer, stated that "the revenue growth reported in the third quarter was particularly pleasing as it had looked as though revenue would be flat with the pick up only coming in the fourth quarter. The trend lines in our performance are impressive. The small loss we reported in the third quarter was expected. Revenue is expected to continue its growth in the fourth quarter and management expects to be able report a return to profitability in the final quarter. The full year result will continue the strong trend of improvement seen over the last few years and should provide a platform for a profitable year in 2007."
